On Selfholding Attack Impact on Imperfect PoW Blockchain Networks

Proof-of-Work (PoW) blockchain systems like Bitcoin and Ethereum are vulnerable to selfholding attack. The prior modeling-based works about this attack only considered Bitcoin and assumed that there were at most two honest pools in a perfect network (no natural fork in such networks). However, a blockchain network is imperfect due to block propagation delay, which can lead to forking. Moreover, there may be more than two pools under attack. This paper aims for a quantitative analysis of an imperfect PoW blockchain network system under selfholding attack. We develop a novel stochastic model and derive formulas to evaluate the effect of selfholding attack on miner revenue, system security and system performance. Our work can be used to analyze the scenario where there are any number of pools suffering selfholding attack in both Ethereum and Bitcoin. The model in this paper can capture the behaviors of a more realistic and more general scenario, compared with the existing models. Moreover, our model and formulas can also be applied to evaluate a blockchain system, which uses a similar reward mechanism and is vulnerable to selfholding attack. Our work can help design a more secure blockchain incentive mechanism and an in-pool reward mechanism.